2012 election results point to continued divisions over tax policy

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Washington National Tax Services

The November 6 election results indicate that President Barack Obama has been elected to a second term. At this writing, President Obama has been projected to have won 303 electoral college votes against 206 for former Massachusetts Governor Mitt Romney (Florida has not yet been called). Although some Congressional races remain undecided, both House Republicans and Senate Democrats are on track to retain majorities in the next Congress.

While the 113th Congress will not take office until January 3, 2013, the current Congress is scheduled to return next week for a lame duck session in which House and Senate members now serving are expected to address expired and expiring business and individual tax provisions, including individual tax rates, as well as scheduled cuts in U.S. defense spending and other federal programs. In addition, it is likely that there will be an effort to pass a relief package for those areas impacted by Superstorm Sandy.

The continued division of power in Washington raises the question whether compromises can be reached before the end of this year to avoid the ""fiscal cliff"" effect of scheduled tax increases and spending reductions. The Federal Reserve and the Congressional Budget Office have warned that the United States risks a recession in early 2013 if no action is taken during the upcoming lame duck session.